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Heffron launches new personal transfer balance cap tool

Meg Heffron
Tony Zhang
19 March 2021 — 3 minute read

Heffron has launched a new personal transfer balance cap calculator which will help navigate the various uncertainties for SMSFs impacted by the complexities from the indexation of the transfer balance cap.

Accountants and advisers can now calculate their client’s new personal transfer balance cap with Heffron’s newly launched calculator, free in their online portal.

The calculator has been developed to tackle the upcoming transfer balance cap increase on 1 July 2021, which is the first increase since the cap was introduced on 1 July 2017.

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Heffron managing director Meg Heffron said while the headline increase is from $1.6 million to $1.7 million, it’s important to remember not everyone is entitled to the full $100,000 adjustment.

“People will have their own personal transfer balance caps, which could be $1.6 million, $1.7 million or somewhere in between,” Ms Heffron said.

While personal transfer balance caps will be calculated over time by the Australian Taxation Office, it will be reliant on the correct and timely reporting of actual transactions like starting or commuting pensions. According to Heffron, this is not useful for advisers, accountants and clients who are planning ahead.

Ms Heffron said the Heffron Transfer Balance Cap calculator addresses the issue by allowing transactions that have already happened (or are going to happen), up until 30 June 2021, to be entered and provides a more enhanced modelling scenario.

“People can enter in the data they have and we’ll do the calculation for them, but along the way, well prompt them and remind them of how particular transactions should be treated. For example, one of the things that counts towards your transfer balance cap is if you inherit a pension from someone else whos died,” Ms Heffron told SMSF adviser.

“So, if someone picks that option, well just remind them to not forget the date you should be putting in is 12 months after they died, not the day they actually died. So, these kinds of handy hints that the calculator will prompt so you are aware of the type of transaction that youve chosen works this way.

“I guess like the calculation is not terribly complicated, but its not totally simple either and we’ve seen a number of articles or things where its been slightly wrong, so we did it so people had comfort that theyre getting it right.

“The tool will prompt users with helpful hints to make sure the right data is entered for less common situations (for example, inheriting a pension from a spouse).

“It will then calculate the clients personal transfer balance cap on 30 June 2021, allowing for their individual indexation entitlement.”

Commenting further, Ms Heffron said it is ultimately a tool whereby the user can input data and have the group calculate the amount based on the user’s particular situation.

“Its quick, easy to use and absolutely accurate. For accountants and advisers, it provides certainty around how this complicated legislation works and makes it easy to get a key piece of information that is vital for advising clients now,” Ms Heffron continued.

“I think lots of people at the moment would be thinking, what am I going to what in the period remaining between now and 30 June, what planning should clients be doing now and part of that planning may well be wondering what their transfer balance cap is going to be on the 1st of July and how would it be different if I did X,Y and Z.

“You know the Tax Office has already all this information for transactions that have already happened that have already been reported to them, but you cant model what would happen if you did certain things.

“We can do loads of training and teach people how to do it, but at the end of the day, you’ve got to actually go do it, and I suppose what we thought was quite exciting about this was for once instead of just developing an Excel spreadsheet and using it. So, we made it a bit more robust and gave it to everybody else which is a thing we want to do more and more of.

“So, thats the exciting bit for us, is actually making some of our training go a bit further, not only do you now understand the rules because youve been to the training, but you dont have to double-check every time, you can just use our tool to do the calculation.”

Tony Zhang

Tony Zhang

Tony Zhang is a journalist at Accountants Daily, which is the leading source of news, strategy and educational content for professionals working in the accounting sector.

Since joining the Momentum Media team in 2020, Tony has written for a range of its publications including Lawyers Weekly, Adviser Innovation, ifa and SMSF Adviser. He has been full-time on Accountants Daily since September 2021.

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